There's been a bit of media coverage of late around the latest business confidence surveys with some pundits predicting doom and gloom, global uncertainties, economic headwinds and the like.
Overall business confidence is down – really? Which businesses, how many, what sectors, when, where, what was asked and how does this add up to NZ Inc's business confidence? Can we be a bit more specific? Answer, no.
Surveys like these provide easy media headlines but are at best a view at a point in time about some businesses and their hiring intentions, which in certain cases may change the next day.
In my view, like so many complex and interrelated things, they provide some interesting information, but are really background noise in terms of business decisions or economic development. Sector dynamics play a real part and can be very different across sectors and regions. The devil really is in the detail.
After the latest tranche of business confidence surveys telling us business confidence was low, the Governor of the Reserve Bank came out and said actually NZ Inc is looking pretty good right now; interest rates are low, meaning companies can afford to invest and our exchange rate being slightly lower means exporters get better value for their exports, the housing market does not look like it will correct suddenly, but will more likely level off as true values come more into line, and Auckland and many of the regions still have demand.
One of the worrying things for the construction sector, for example, at the moment is dealing with too much work. That implies some structural things within the sector that need addressing rather than the economy or demand per se. You will not hire if you do not believe you can make a profit. Detail.
Right now, however, Northland construction companies are making real headway. Horticulture companies are also investing, expanding and exporting, and I don't know what is in the water in Northland but there is no shortage of entrepreneurs and business ideas for the future.
We've always known there is great potential in Northland, but since the Provincial Growth Fund has livened up regional development Northland is leading the pack with economic and business development ideas.
Looking forward, ensuring we gain the type of investment that will deliver internationally competitive specialisations, long-term higher-paying jobs, higher-value exports and enough diversity in the economy to provide insurance against downturns in key sectors will be the litmus tests of the PGF.
Generic brush stroke surveys, or for that matter macroeconomic settings, important as they are, are not the whole picture. Businesses gain confidence by doing, by making mistakes and adjusting, by getting it right and taking advantage of that, by reaching into new opportunities with their strengths and by constantly innovating – innovating in processes, products, services, and with who they work with.
My point is this, the real work is on the ground, project by project, business by business, sector by sector, region by region. It's a long game, not a survey or an interest rate adjustment.
What we need more of is in-depth regional and sector analyses that reveal development opportunities to improve our productivity and international competitiveness. Let's talk about that instead.
Can we please, therefore, stop listening to bank economists about interest rates, as if their crystal ball gazing will change how a business owner will react the next day, or gazing at our feet after the latest business confidence survey.
The next day consists of securing that next order, paying the wages and doing the business. I'd rather hear from them.
■ Dr David Wilson is the Chief Executive Officer of Northland's Economic Development Agency, Northland Inc, and Chair of Economic Development NZ.